Appellee, state of Arkansas, through her Attorney General, filed suit against the State Note Board, attacking as unconstitutional section 17 of Act No. 15 passed at the Second Extraordinary Session of the Legislature of 1932, p. 55; the same being in words and figures as follows, to wit:
"Section 17. It shall be the duty of the State Note Board to issue short term notes in lieu of all legal vouchers or warrants now or hereafter issued for work, labor, material, or supplies, heretofore done or furnished by any contractor, sub-contractor, materialman or laborer in the construction, maintenance or repair of the State highways or for the State Highway Department upon request being made therefor by the legal holder or holders of any such obligations; such short term notes to be in substantially the form of the short term notes heretofore sold by said State Note Board for the State Highway Commission and executed in the same manner, bearing interest at the rate of 5% per annum from the date of issuance, and not more than $750,000.00 worth of such notes shall mature on February 1st, 1934, and the maturities of the balance thereof shall be equally divided, one-half to mature on February 1st, 1935 and one-half to mature on February 1st, 1936. The State Note Board shall use its discretion in arranging the maturity dates of the various notes issued so that any of such legal holders of said obligations shall not be given preference as to the maturity date of the notes issued to him. Said short term notes shall be in denominations of $100.00, $500.00 and $1,000.00, and if the amount due any of the legal holders of such obligations is less than the amount which can be paid by notes of those denominations, then such legal holder may pay the difference in cash and receive such note, or he may take from the State Highway Commission a voucher showing the balance that is due him and which cannot be paid in notes of that description and which voucher shall be paid as soon as there shall be in the State Highway fund moneys available for the purpose; provided, this Act shall not validate any claim, voucher, or warrant or other evidence of indebtedness issued under or pursuant to an illegal contract, and provided further, that no note or notes shall be issued in lieu of any such claim in excess of $150.00 where such claim is based on a cost plus contract or a contract not let on competitive bidding until such claim is approved and the issuance of such notes are authorized by the State Highway Audit Commission, or until the validity of such claim is finally adjudicated and determined by a court of competent jurisdiction. No additional highway bonds or highway notes shall be authorized, issued or sold in the calendar year of 1932, except those highway notes provided for in this Section of this Act to be issued in lieu of legal vouchers or warrants for work, labor, material or supplies heretofore done or furnished by any contractor, sub-contractor, laborer or materialman in the construction, maintenance or repair of the State highways or for the State Highway Department and not more than $1,750,000.00 worth of highway bonds shall be issued in the calendar year of 1933 or in any calendar year thereafter, this being the approximate amount necessary to match Federal aid and thereby prevent the loss of such aid; and no highway bonds shall hereafter be issued except with the approval of a majority of the State Note Board including the Governor, or with the approval of at least seven members of the State Note Board, nor shall any highway bonds be issued in any year in excess of the amount of Federal aid allotted to Arkansas under Acts of Congress for that particular year. No bonds or other evidences of indebtedness shall ever be sold under the provisions of this Act for less than par."
The ground upon which the validity of the statute was assailed being that said section was not within the purview of the Governor's proclamation convening the General Assembly, and asking that the State Note Board, which met and adopted resolutions for the
issuance of $2,100,000 in short-term state notes as provided under said section of said Act No. 15, be forever enjoined and restrained from causing the printing or lithographing of said state notes and from issuing the same.
Appellant demurred to the complaint because it did not state a cause of action, and that the appellee was not entitled to the relief prayed for, and that the said State Note Board was acting within its authority in issuing the notes mentioned in the complaint.
The demurrer to the complaint was overruled and the appellant elected to stand on its demurrer,...
